California Servicing Reference Guide
- Kacey Olson
Note: California AB 1284 Amends the Name of the "California Finance Lenders Law" to the "California Financing Law", October 4, 2017
| Citation | Topic | Requirement |
| Civil Code / Cal. Civ. Code §1916.7 | Adjustable-Payment, Adjustable-Rate Notice | Applies to APM/ARM loans made under Section 1916.7. Applies to licensees under the RMLA and FLL. At least 60 days prior to the due date of a monthly installment to be revised due to a change in the interest rate, notice must be mailed to the borrower of the following: (1) the base index; (2) the most recently published index at the date of the change in the rate; (3) the interest rate in effect as a result of the change; (4) the amount of the unpaid principal balance; (5) if the interest scheduled to be paid on the due date exceeds the amount of the installment, a statement to that effect, including the amount of excess and the borrower's options as described in Cal. Civ. Code §1916.7(b)(4); (6) the amount of the revised monthly installment; (7) the borrower's right to prepayment; and (8) the address and telephone number of the office of the lender to which inquiries may be made. |
| Civil Code / Cal. Civ. Code §2924i | Balloon Loan Maturity Notice | At least 90 days but not more than 150 days prior to the due date of the final payment on a balloon loan, the holder of the loan must deliver or mail by first-class mail to the trustor, a written notice that includes all of the following: (1) a statement of the name and address of the person to whom the final payment is required to be paid; (2) the date on or before which the final payment is required to be paid; (3) the amount of the final payment, or if the exact amount is not known, a good faith estimate of the amount, including unpaid principal, interest and any other charges; and (4) if the borrower has a contractual right to refinance the final payment, a statement to that effect. The above notice is not required for open-end loans, as defined in Regulation Z, whether or not the transaction would otherwise be subject to Regulation Z, or loans made for the principal purpose of financing the construction of one or more residential units. |
| Civil Code / Cal. Civ. Code §2943 | Beneficiary Statement | A mortgage lender must, within 21 days of the receipt of a written demand by a borrower, a person having a subordinate lien on the property, or the escrow holder, prepare and deliver a complete copy of the note or other evidence of indebtedness, including any modifications, and a beneficiary statement. The beneficiary statement includes the amount of the unpaid balance, the interest rate, any overdue installments of either principal or interest, the amounts of periodic payments, the date on which the obligation is due, the date to which real estate taxes and special assessments have been paid (if known to the beneficiary), the amount in an impound account for taxes and insurance premiums, the nature and if known, the amount, of any additional charges, costs or expenses paid or incurred by the beneficiary which have become a lien on the real property, and whether the obligation secured may be transferred to a new borrower. Except in a FHA insured or VA guaranteed loan, the charge for a beneficiary statement may not be more than $30. |
| Residential Mortgage Lending Act / Cal. Fin. Code §50204(d) | Blank Spaces | A licensee may not obtain or induce an agreement or other instrument in which blanks are left to be filled in after execution. |
| Financing Law / Cal. Fin. Code §22333 | Blank Spaces | A licensee may not take documents from the borrowers which have blanks left to be filled in after execution. |
| Cal. Civ. Code §2924k(a) | Distribution of Proceeds of Sale - Non-Judicial | (a) The trustee, or the clerk of the court upon order to the clerk pursuant to subdivision (d) of Section 2924j , shall distribute the proceeds, or a portion of the proceeds, as the case may be, of the trustee's sale conducted pursuant to Section 2924h in the following order of priority: (1) To the costs and expenses of exercising the power of sale and of sale, including the payment of the trustee's fees and attorney's fees permitted pursuant to subdivision (b) of Section 2924d and subdivision (b) of this section. (2) To the payment of the obligations secured by the deed of trust or mortgage which is the subject of the trustee's sale. (3) To satisfy the outstanding balance of obligations secured by any junior liens or encumbrances in the order of their priority. (4) To the trustor or the trustor's successor in interest. In the event the property is sold or transferred to another, to the vested owner of record at the time of the trustee's sale. |
| Cal. Civ. Code §2924.11 | Dual Tracking Prohibited | (a) If a borrower submits a complete application for a foreclosure prevention alternative offered by, or through, the borrower’s mortgage servicer, a mortgage servicer, trustee, mortgagee, beneficiary, or authorized agent shall not record a notice of sale or conduct a trustee’s sale while the complete foreclosure prevention alternative application is pending, and until the borrower has been provided with a written determination by the mortgage servicer regarding that borrower’s eligibility for the requested foreclosure prevention alternative. Effective January 1, 2018. |
| Civil Code / Cal. Civ. Code §2954.8(a) & (b) | Impound Account Interest | The lender must pay at least 2% interest per year on the funds held in impound accounts. Such interest must be credited to the borrower's account annually or upon termination of the account, whichever is earlier. The lender may not impose any escrow fee if the fee would result in an interest rate of less than 2% being paid on the escrow funds. |
| Cal. Civ. Proc. §701.540(h) | List of Persons Having Liens on Real Property - Judicial | (h) Not earlier than 30 days after the date of levy, the judgment creditor shall determine the names of all persons having liens on the real property on the date of levy that are of record in the office of the county recorder and shall instruct the levying officer to mail notice of sale to each lienholder at the address used by the county recorder for the return of the instrument creating the lien after recording. The levying officer shall mail notice to each lienholder, at the address given in the instructions, not less than 20 days before the date of sale. |
| Real Estate Law / Cal. Bus. & Prof. Code §10147.6 | Mortgage Loan Modification Notice | Any licensee who negotiates, attempts to negotiate, arranges, attempts to arrange, or otherwise offers to perform a mortgage loan modification or other form of mortgage loan forbearance for a fee or other form of compensation paid by the borrower must provide the following to the borrower: "It is not necessary to pay a third party to arrange for a loan modification or other form of forbearance from your mortgage lender or servicer. You may call your lender directly to ask for a change in your loan terms. Nonprofit housing counseling agencies also offer these and other forms of borrower assistance free of charge. A list of nonprofit housing counseling agencies approved by the United States Department of Housing and Urban Development (HUD) is available from your local HUD office or by visiting www.hud.gov." The notice must be provided as a separate statement and must be in not less than 14-point bold type. The notice must be provided prior to entering into any fee agreement with the borrower. If loan modification or other mortgage loan forbearance services are offered or negotiated in Spanish, Chinese, Tagalog, Vietnamese or Korean, a translated copy of the notice must be provided to the borrower in that foreign language. |
Civil Code / Cal. Civ. Code §2924(a) | Notice of Default | (b) Any person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into any of the following, shall deliver to the other party to the contract or agreement and prior to the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, that includes a translation of every term and condition in that contract or agreement. (a) A nonjudicial foreclosure proceeding is commenced by recording a notice of default. The notice of default must: (1) identify the mortgage or deed of trust by stating the name of the trustor and giving the book and page, or instrument number, if applicable, where the mortgage or deed of trust is recorded or a description of the mortgaged or trust property; (2) contain a statement that a breach of the obligation for which the mortgage or transfer in trust is security has occurred; and (3) set forth the nature of each breach actually known to the beneficiary and of the election to sell the property to satisfy that obligation and any other obligation secured by the deed of trust or mortgage that is in default. See also Loss Mitigation for efforts that must be undertaken prior to the Notice of Default. There is also specific wording required in the notice, see the sample disclosure for specific language. (b) The mortgagee, trustee, or other person authorized to record the notice of default or the notice of sale shall do each of the following: (1) Within 10 business days following recordation of the notice of default, deposit or cause to be deposited in the United States mail an envelope, sent by registered or certified mail with postage prepaid, containing a copy of the notice with the recording date shown thereon, addressed to each person whose name and address are set forth in a duly recorded request therefor, directed to the address designated in the request and to each trustor or mortgagor at his or her last known address if different than the address specified in the deed of trust or mortgage with power of sale. (c) The mortgagee, trustee, or other person authorized to record the notice of default or the notice of sale shall do the following: (1) Within one month following recordation of the notice of default, deposit or cause to be deposited in the United States mail an envelope, sent by registered or certified mail with postage prepaid, containing a copy of the notice with the recording date shown thereon, addressed to each person set forth in paragraph (2), provided that the estate or interest of any person entitled to receive notice under this subdivision is acquired by an instrument sufficient to impart constructive notice of the estate or interest in the land or portion thereof that is subject to the deed of trust or mortgage being foreclosed, and provided the instrument is recorded in the office of the county recorder so as to impart that constructive notice prior to the recording date of the notice of default and provided the instrument as so recorded sets forth a mailing address that the county recorder shall use, as instructed within the instrument, for the return of the instrument after recording, and which address shall be the address used for the purposes of mailing notices herein. (2) The persons to whom notice shall be mailed under this subdivision are: (B) The beneficiary or mortgagee of any deed of trust or mortgage recorded subsequent to the deed of trust or mortgage being foreclosed, or recorded prior to or concurrently with the deed of trust or mortgage being foreclosed but subject to a recorded agreement or a recorded statement of subordination to the deed of trust or mortgage being foreclosed. (C) The assignee of any interest of the beneficiary or mortgagee described in subparagraph (B), as of the recording date of the notice of default. (D) The vendee of any contract of sale, or the lessee of any lease, of the estate or interest being foreclosed that is recorded subsequent to the deed of trust or mortgage being foreclosed, or recorded prior to or concurrently with the deed of trust or mortgage being foreclosed but subject to a recorded agreement or statement of subordination to the deed of trust or mortgage being foreclosed. (E) The successor in interest to the vendee or lessee described in subparagraph (D), as of the recording date of the notice of default. (F) The office of the Controller, Sacramento, California, where, as of the recording date of the notice of default, a “Notice of Lien for Postponed Property Taxes” has been recorded against the real property to which the notice of default applies. |
| Cal. Civ. Code §2924.17 | Notice of Default Declaration | (a) A declaration recorded pursuant to Section 2923.5 or, until January 1, 2018, pursuant to Section 2923.55, a notice of default, notice of sale, assignment of a deed of trust, or substitution of trustee recorded by or on behalf of a mortgage servicer in connection with a foreclosure subject to the requirements of Section 2924, or a declaration or affidavit filed in any court relative to a foreclosure proceeding shall be accurate and complete and supported by competent and reliable evidence. (b) Before recording or filing any of the documents described in subdivision (a), a mortgage servicer shall ensure that it has reviewed competent and reliable evidence to substantiate the borrower’s default and the right to foreclose, including the borrower’s loan status and loan information. Effective January 1, 2018. |
| Civil Code / Cal. Civ. Code §1799.101 | Notice of Delinquency to Cosigner | No creditor may provide any adverse information with respect to any cosigner to a consumer credit reporting agency regarding a delinquency on a consumer credit contract unless the cosigner is provided with written notice of the delinquency prior to, or at the same time that information is provided to the credit reporting agency. The notice of delinquency need not be given to a cosigner whose address (as shown on the creditor's records) is the same as that shown for the primary obligor. The notice requirement may be satisfied by mailing a copy of the required notice to the cosigner at the cosigner's address. |
| Cal. Civ. Code §2924f(c) | Notice of Intent to Sale - Non-Judicial | (3) If any default of the obligation secured by a deed of trust or mortgage described in paragraph (1) has not been cured within 30 days after the recordation of the notice of default, the trustee or mortgagee shall mail to the trustor or mortgagor, at his or her last known address, a copy of the Notice of Intent to Sale statement. |
| Civil Code / Cal. Civ. Code §1785.26 | Notice of Negative Credit Information | A creditor may submit negative credit information concerning a consumer to a consumer credit reporting agency only if the creditor notifies the consumer affected. After providing this notice, a creditor may submit additional information to a credit reporting agency respecting the same transaction or extension of credit without providing additional notice. The notice must be in writing and must be provided by first class mail, postage prepaid, to the consumer's last known address, either before the creditor notifies the credit reporting agency, or within 30 days of notification. The notice may be part of any notice of default, billing statement, or any other correspondence, and may be included as preprinted or standard form language in any of these documents. |
| Code of Civil Procedure / CA Civ Pro Code § 405.20.a | Notice of Pendency (optional) | A party to an action who asserts a real property claim may record a notice of pendency of action in which that real property claim is alleged. The notice may be recorded in the office of the recorder of each county in which all or part of the real property is situated. The notice must contain the names of all parties to the action and a description of the property affected by the action. |
| Cal. Civ. Code §2924c(a)(2) | Notice of Rescission - Non-Judicial | (2) If the trustor, mortgagor, or other person authorized to cure the default pursuant to this subdivision does cure the default, the beneficiary or mortgagee or the agent for the beneficiary or mortgagee shall, within 21 days following the reinstatement, execute and deliver to the trustee a notice of rescission that rescinds the declaration of default and demand for sale and advises the trustee of the date of reinstatement. The trustee shall cause the notice of rescission to be recorded within 30 days of receipt of the notice of rescission and of all allowable fees and costs. No charge, except for the recording fee, shall be made against the trustor or mortgagor for the execution and recordation of the notice which rescinds the declaration of default and demand for sale. |
Notice of Sale | A Notice of Sale may not be given until at least 3 months have elapsed from the time a Notice of Default is filed. A mortgagee, trustee, or other person authorized to take sale must wait an additional 90 days prior to giving a Notice of Sale. | |
| Civil Code / Cal. Civ. Code §2924.8(a) | Notice to Residents of Foreclosed Property | If the billing address for the mortgage note is different than the property address and the loan is secured by residential real property, the trustee must post the a notice on the property to be sold and at the same time, the mortgagee, trustee, or beneficiary must mail the above notice in an envelope addressed to the “Resident of property subject to foreclosure sale.” |
| Civil Code / Cal. Civ. Code §2923.5(a) | Prior to Notice of Default | A mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent may not record a Notice of Default until: (1) either 30 days after initial contact with the borrower is made or 30 days after satisfying the due diligence requirements described in Cal. Civ. Code §2923.5(e); (2) the mortgage servicer complies with Cal. Civ. Code §2924.18(1)(a), if the borrower has provided a complete application; and (3) a mortgage servicer has contacted the borrower in person or by telephone in order to access the borrower’s financial statement and explore options for the borrower to avoid foreclosure. The due diligence requirements are many, see citation for a listing of the due diligence that must be undertaken prior to issuance of a notice of default. |
| Civil Code / Cal. Civ. Code §2954.6 | Private Mortgage Insurance Notice | A borrower must receive notice regarding the borrower's right to terminate private mortgage insurance (PMI) within 30 days after the close of escrow. The notice must be printed in at least 10-point bold type and must contain the following: (1) any information necessary to permit the borrower to communicate with the insurer or the lender concerning the borrower's PMI; (2) any conditions which must be satisfied before the lender will permit termination of PMI (including, minimum loan-to-value ratios and whether or not an appraisal will be required); and (3) the procedure the borrower must follow in order to terminate PMI. |
| Government of Counties / §27388.1(a)(1) | Recording Fee | Commencing January 1, 2018, and except as provided in paragraph (2), in addition to any other recording fees specified in this code, a fee of seventy-five dollars ($75) shall be paid at the time of recording of every real estate instrument, paper, or notice required or permitted by law to be recorded, except those expressly exempted from payment of recording fees, per each single transaction per parcel of real property. The fee imposed by this section shall not exceed two hundred twenty-five dollars ($225).
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| Cal. Civ. Code §2923.7. | Single Point of Contact | (a) Upon request from a borrower who requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish a single point of contact and provide to the borrower one or more direct means of communication with the single point of contact. Effective January 1, 2018. |
Special Rules for Service Members - Judicial | (c) No sale, foreclosure, or seizure of property for nonpayment of any sum due under any obligation as provided in subdivision (a), or for any other breach of the terms thereof, whether under a power of sale, under a judgment entered upon warrant of attorney to confess judgment contained therein, or otherwise, shall be valid if made during the period of military service or within nine months thereafter, except pursuant to an agreement between the parties, unless upon an order previously granted by the court and a return thereto made and approved by the court. (e) Any person who shall knowingly make or cause to be made any sale, foreclosure, or seizure of property, defined as invalid by subdivision (c), or attempts to do so, is guilty of a misdemeanor, and shall be punishable by imprisonment not to exceed one year or by a fine not to exceed one thousand dollars ($1,000), or both. | |
| Civil Code / Cal. Civ. Code §2920.7 | Successor in Interest | (a) Upon notification by someone claiming to be a successor in interest that a borrower has died, and where that claimant is not a party to the loan or promissory note, a mortgage servicer shall not record a notice of default pursuant to Section 2924 until the mortgage servicer does both of the following: (1) Requests reasonable documentation of the death of the borrower from the claimant, including, but not limited to, a death certificate or other written evidence of the death of the borrower. A reasonable period of time shall be provided for the claimant to present this documentation, but no less than 30 days from the date of a written request by the mortgage servicer. (2) Requests reasonable documentation from the claimant demonstrating the ownership interest of that claimant in the real property. A reasonable period of time shall be provided for the claimant to present this documentation, but no less than 90 days from the date of a written request by the mortgage servicer. |
| Cal. Civ. Code §2924.11 | Written Denial Notice | (b) Following the denial of a first lien loan modification application, the mortgage servicer shall send a written notice to the borrower identifying with specificity the reasons for the denial and shall include a statement that the borrower may obtain additional documentation supporting the denial decision upon written request to the mortgage servicer. Effective January 1, 2018. |